Professional Documents
Culture Documents
PROJECT REPORT ON
SUBMITTED TO
SUBMITTED BY
MR.NISHANT CHAUHAN
GUIDED BY
2021-2022
ACKNOWLEDGEMENT
Words put on the paper are more ink but when they have to prepare for there exist a through
behind them I too have purpose to express my gratitude towards those individuals without whose
guidance the project would not have been its successful termination. Every successful work
requires certain amount of inspiration, motivation ,creativity and guidance .During my summer
project ,I got valuable guidance from various people .
I want to thank our Director Dr.P.B Suryawanshi Sir & also my project Guide Prof. Padmavati
Sugnoor for his guidance & helpful cooperation to me in sorting out all the difficulties &also for
providing me with the useful information about the importance of values and ethics in any
organization.
Place :-
STUDENT DECLARATION
I Nishant Chauhan hereby declare that the project entitled A Study On Investment Option &
Investors Attitude Towards Investment In Private Insurance Companies At Shriram Life Insurance
Company” carried out at is a genuine and original work of the partial fulfillment of Master
in Business Administration to Savitribai Phule University. To the best of my knowledge,
any part of this context has not been submitted earlier for any degree or Certificate
examination. The collected data and certificate are true.
Further I undertake that I will be solely responsible for anything arise out of unfair mean.
Place :-
INDEX
Annexure
Reference
Questionnaire
EXECUTIVE SUMMARY
Investment is a commitment of funds made in the expectation of some positive return. If the
investment is properly undertaken, the return will be commensurate with the risk the investor
assumes. Investment goals vary from person to person business to business. While some
want security, others give more weightage to returns alone. With objectives defying any
range, it is obvious that the products required will vary as well. The business of insurance is
related to the protection of the economic values of assets. Every asset has a value. The asset
would have been created through the efforts of the owner, in the expectation that, either
through the income generated there from or some other output, some of his needs would be
met. However, if the assets get lost earlier, being destroyed or made non-functional, through
an accident or other unfortunate event, the owner and those deriving benefits there from
suffer. The present study aimed that to know the investors attitude towards investment in
private insurance companies particularly in Nashik district.
CHAPTER 1
INTRODUCTION
1.1 INTRODUCTION:
People facing common risks come together and make their small contributions to a
common fund. The contribution to be made by each person is determined on assumption
and past experience. The business of insurance done by insurance companies called Insurers
is to bring together persons with common insurance interests (sharing the same risk)
collecting the share or contribution (called premium) from all of them and paying out
compensations (called claims) to those who suffer. Premium is determined base of various
factors like age, amount of cover, period of cover with some additions made for the
expenses of administration. The insurer is in the position of a trustee as it is managing the
common fund for and on behalf of the community. It has to ensure that nobody is allowed
to take undue advantage of the arrangement. That is to say that the management of the
business requires care to prevent entry onto the group of people whose risks are not of the
same kinds as well as paying claims on losses that are not accidental. The decision to
allow entry is the process of underwriting of risk. Both underwriting and claim settlement
have to done with great care.
1.2 INVESTOR
An individual who commits money to investment products with the expectation of
financial return. Generally, the primary concern of an investor is to minimize risk while
maximizing return, as opposed to a speculator, who is willing to accept a higher level of
risk in the hopes of collecting higher-than-average profits. Investors ‘behavior is the study
of how individual make decision to spend their available resources (time, money and
efforts) on investment related items. It helps the marketers to understand what, why,
where, when and how an investor behaves with respect to products and services.
Knowing answer to this question let marketers to design their marketing strategies
accordingly.
Consumer behavior is very important to understand what influences the buying decisions
of the consumers and why does it so.
Consumer behavior is very important to understand what influences the buying decisions
of the consumers and why does it so.
To pray or to pay for protection is the spirit of the humanity. Man has been accustomed to
pray God for protection and security from time immemorial. In modern days Insurance
Companies want him to pay for protection and security. The insurance man says "God helps
those who help themselves"; probably he is correct.
Too many people in this country are not in employment; and work for too many no longer
guarantees income security. Several millions are part-time, self employed and low-earning
workers living under pitiable circumstances where there is no security cover against risk.
Further the inherent changing employment risks, the prospect of continual change in the
work place with its attendant threats of unemployment and low pay especially after the
adoption of New Economic Policy and the imminent life cycle risks - a new source of
insecurity which includes the changing demands of family life, separation, divorce and
elderly dependents – are tormenting the society. Risk has become central to one's life. It is
within this background life insurance policy has been introduced by the insurance
companies covering risks at various levels. Life insurance coverage is against disablement or
in the event of death of the insured, economic support for the dependents. It is a measure of
social security to livelihood for the insured or dependents. This is to make the right to life
meaningful, worth living and right to livelihood a means for sustenance. Therefore, it goes
without saying that an appropriate life insurance policy within the paying capacity and
means of the insured to pay premium is one of the social security measures envisaged under
the Indian Constitution. Hence, right to social security, protection of the family, economic
empowerment to the poor and disadvantaged are integral part of the right to life and dignity
of the person guaranteed in the constitution.
Man finds his security in income (money) which enables him to buy food, clothing, shelter
and other necessities of life. A person has to earn income not only for himself but also for
his dependents, viz., wife and children. He has to provide legally for his family needs, and
so he has to keep aside something regularly for a rainy day and for his old age. This
fundamental need for security for self and dependents proved to be the mother of
invention of the institution of life insurance.
Every asset is expected to last for a certain period of time during which it will perform.
After that, the benefit may not be available. There is a life-time for a machine in a factory
or a cow or a motor car. None of them will last for ever. The owner is aware of this and he
can so manage his affairs that by the end of that period or life-time, a substitute is made
available. Thus, he makes sure that the value or income is not lost. However, the asset may
get lost earlier. An accident or some other unfortunate event may destroy it or make it non-
functional. In that case, the owner and those deriving benefits from there, would be
deprived of the benefit and the planned substitute would not have been ready. There is an
adverse or unpleasant situation. Insurance is a mechanism that helps to reduce the effect of
such adverse situations.
Insurance, in law and economics, is a form of risk management primarily used to hedge
against the risk of a contingent loss. Insurance is defined as the equitable transfer of the
risk of a potential loss, from one entity to another, in exchange for a premium. Insurer, in
economics, is the company that sells the insurance. Insurance rate is a factor used to
determine the amount, called the premium, to be charged for a certain amount of insurance
coverage. Risk management, the practice of appraising and controlling risk, has evolved as
a discrete field of study and practice.
1.11 HISTORY OF INDIAN INSURANCE INDUSTRY
The story of insurance is probably as old as the story of mankind. The same instinct that
prompts modern businessmen today to secure themselves against loss and disaster existed
in primitive men also. They too sought to avert the evil consequences of fire and flood
and loss of life and were willing to make some sort of sacrifice in order to achieve
security. Though the concept of insurance is largely a development of the recent past,
particularly after the industrial era – past few centuries – yet its beginnings date back
almost 6000 years.
In 1818 the British established the first insurance company in India in Calcutta, the
Oriental Life Insurance Company. First attempts at regulation of the industry were made
with the introduction of the Indian Life Assurance Companies Act in 1912. A number of
amendments to this Act were made until the Insurance Act was drawn up in 1938.
Noteworthy features in the Act were the power given to the Government to collect
statistical information about the insured and the high level of protection the Act gave to
the public through regulation and control. When the Act was changed in 1950, this meant
far reaching changes in the industry. The extra requirements included a statutory requirement of a
certain level of equity capital, a ceiling on share holdings in such companies to prevent dominant
control (to protect the public from any adversarial policies from one single party), stricter control
on investments and, generally, much tighter control. In 1956, the market contained 154 Indian
and 16 foreign life insurance companies. Business was heavily concentrated in urban areas and
targeted the higher echelons of society. “Unethical practices adopted by some of the players
against the interests of the consumers” then led the Indian government to nationalize the industry.
In September 1956, nationalization was completed, merging all these companies into the so-
called Life Insurance Corporation (LIC). It was felt that “nationalization has lent the industry
fairness, solidity, growth and reach.”
Insurance may be described as a social device to ensure protection of economic value of life and
other assets. Under the plan of insurance, a large number of people associate themselves by
sharing risks attached to individuals. The risks, which can be insured against, include fire, the
perils of sea, death and accidents and burglary. Any risk contingent upon these, may be insured
against at a premium commensurate with the risk involved. Thus collective bearing of risk is
insurance.
Insurance is a contract whereby, in return for the payment of premium by the insured, the insurers
pay the financial losses suffered by the insured as a result of the occurrence of unforeseen events.
The term "risk" is used to describe the possibility of adverse results flowing from any occurrence
or the accidental happenings, which produce a monetary loss.
Insurance is a pool in which a large number of people exposed to a similar risk make
contributions to a common fund out of which the losses suffered by the unfortunate few, due to
accidental events, are made good. The sharing of risk among large groups of people is the basis of
insurance. The losses of an individual are distributed over a group of individuals.
1.11.2 DEFINITIONS:
General definition:
In the words of John Magee, “Insurance is a plan by themselves which large number of
people associate and transfer to the shoulders of all, risks that attach to individuals.”
Fundamental definition:
Sharing of risks
Cooperative device
Evaluation of risk
Payment on happening of a special event
The amount of payment depends on the nature of losses incurred.
The success of insurance business depends on the large number of people insured
against similar risk.
Insurance is a plan, which spreads the risk and losses of few people among a large
number of people.
The insurance is a plan in which the insured transfers his risk on the insurer.
Insurance is a legal contract which is based upon certain principles of insurance which
includes utmost good faith, insurable interest, contribution, indemnity, causes
proxima, subrogation, etc.
The scope of insurance is much wider and extensive.
Secondary functions:
2. Small capital to cover large risks: - Insurance relives the businessman from security
investment, by paying small amount of insurance against larger risks and uncertainty.
Other Function:
Insurance companies are business houses. The product they sell is financial protection.
To succeed and survive, they must cover their costs, which include payments to cover the
losses of policyholders, as well as sales and administrative expenses, taxes and dividends.
Investment income.
The premiums are collected on a regular basis and invested in Government Bonds, Gilt,
stocks,
mutual funds, real estates and other conservative avenues. However, investment income
depends on market conditions, interest rates, economy etc. and varies from year to year.
Because of the uncertainty associated with the investment income, insurance companies
must generate enough income from premiums to cover the bulk of their expenses.
1818: Oriental Life Insurance Company, the first life insurance company on Indian soil
started functioning.
1870: Bombay Mutual Life Assurance Society, the first Indian life 'Insurance Company
started 'Its business,
1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate
the life 'Insurance business.
1928: The Indian Insurance Companies Act enacted to enable the government to collect
statistical 'Information about both life and non life insurance businesses.
1938: Earlier legislation consolidated and amended to by the Insurance Act with the
objective of protecting the 'Interests of the insuring pubic.
1956: 245 Indian and foreign insurance and provident societies are taken over by the
central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act,
1956, with a capital contribution of Rs. 5 chores from the Government of India.
Life insurers
Insurance industry, as on 1.4.2000, comprised mainly two players: the state insurers:
General insurers:
General Insurance Corporation of India (GIC) with effect from Dec'2000, a National
Reinsure
GIC had four subsidiary companies, namely with effect from Dec'2000, these subsidiaries
have been de-linked from the parent company and made as independent insurance
companies.
Yr: 2000-2007: Insurance Industry in the year 2009-2010 had 15 new entrants, namely:
LIFE INSURERS:
The Insurance Regulatory and Development Authority Act, 1999 is an act to provide for the
establishment of an Authority to protect the interests of holders of insurance policies, to regulate,
promote and ensure orderly growth of the insurance industry 17 and for matters connected
therewith or incidental thereto and further to amend the Insurance Act, 1938, the Life Insurance
Corporation Act, 1956 and the General insurance Business
(Nationalization) Act, 1972 to end the monopoly of the Life Insurance Corporation of India (for
life insurance business) and General Insurance Corporation and its subsidiaries (for general
insurance business).
The act extends to the whole of India and will come into force on such date as the Central
Government may, by notification in the Official Gazette specify. Different dates may be
appointed for different provisions of this Act. The Act has defined certain terms; some of the
most important ones are as follows:
Appointed day means the date on which the Authority is established under the act.
Authority means the established under this Act.
Interim Insurance Regulatory Authority means the Insurance Regulatory Authority set up by the
Central Government through Resolution No. 17(2)/ 94-lns-V dated the 23rd January, 1996.
Words and expressions used and not defined in this Act but defined in the
Insurance Act, 1938 or the Life Insurance Corporation Act, 1956 or the General Insurance
Business (Nationalization) Act, 1972 shall have the meanings respectively assigned to them in
those Acts.
A new definition of "Indian Insurance Company" has been inserted. "Indian insurance company"
means any insurer being a company
(a) Which is formed and registered under the Companies Act, 1956
(b) In which the aggregate holdings of equity shares by a foreign company, either by itself or
through its subsidiary companies or its nominees, do not exceed twenty-six percent, paid up
capital in such Indian insurance company.
(c) Whose sole purpose is to carry on life insurance business, general insurance business or re-
insurance business?
(a) A Chairman;
(b) five whole-time members;
(c) four part-time members,
(all appointed by the Government of India)